Over at Mini-Microsoft, the Redmond insiders who frequent the site’s comments are incredulous over the layoff rumors, insisting that they are baseless. Costs will be cut, they say, but they will be cut through attrition and reduction in open headcount. “For the last time folks–THERE ARE NO LAYOFFS HAPPENINGS IN JANUARY,” writes one Mini-Microsoft commenter. “Beyond Jan…well we dont have a crystal ball–but if the economy doesn’t improve and the company misses targets–it would get uglier for everyone–from no raises/no bonuses to (maybe) cutbacks/layoffs… but then, those are the rules of the game in corporate America.”

Now, Mini-Microsoft is not an official company blog, and it’s penned by an anonymous author. So the layoff rumor it’s floating should be viewed as just that, a rumor. That said, the blog has long been a clearinghouse for internal information Microsoft would much prefer to keep under wraps–and a fairly accurate one at that. So it’s certainly worth paying attention to. As Joe Wilcox writes over at Microsoft Watch, “When Mini speaks layoffs, I believe.”

Paul Kedrosky at Infectious Greed says Yahoo has bought itself some more time–and litigation:

I think what has largely happened here is we have bought time and lawsuits. If I was a Yahoo shareholder I’d be seriously pissed. Microsoft pulled us out of our recent share price slump, but management was too cutesy and territorial to take the money and run. My guess is that Yahoo’s share price falls quickly on Monday, and then finds support in the low-$20, a price reflecting a belief that this is not yet over. Only then, once some key shareholders pipe up and once Yahoo has to defend itself against the inevitable lawsuits, will we know how likely it is that its brazen move sticks.”

Mini-Microsoft says Microsoft’s decision to walk restores his faith in the company:

Out of this had best come a new reorganization of our online properties. Out with the old already. We had reached a bet-the-company point in going after Yahoo to make up for the lack of performance out of MSN/Search/AdCenter in an attempt to leapfrog forward. I think we need to hang up on the good-enough consensus culture for a while and put in a strategy czar to get things done vs. expecting something to arise out of the dysfunctional ecosystem we currently have.”

Over at ZDNet Larry Dignan opines that there are better ways for Microsoft to spend its $44.6 billion:

Windows needs work. Vista has image problems. The operating system is under attack from multiple fronts and needs to become more lightweight and modular. Windows is what made Microsoft and there are serious questions about its future. The biggest knock on this entire Microhoo saga: It was a distraction that could take focus away from the real cash cow. If you think the negotiations were a distraction, just imagine how dealing with regulators and integrating Yahoo would have diverted attention. Despite all the Microhoo chatter, Windows 7 (all resources) may be the thing that determines whether Microsoft stays relevant or not.”

And the Seattle Times’ Brier Dudley agrees:

Thank goodness the tide finally turned and Ballmer came to his senses. Imagine what Microsoft could do just with that “extra” $5 billion. Ballmer could buy most of the Web start-ups in Seattle and Silicon Valley, plus a few biotechs and energy ventures for good measure. Yahoo CEO Jerry Yang will now go down in history as the obstinate founder who blew a chance to milk the world’s richest software company at the peak of its midlife angst.”

Meanwhile, Mathew Ingram says Yahoo CEO Jerry Yang’s days are numbered:

In my view, Yahoo CEO Jerry Yang has gone way beyond fiduciary duty and has been effectively blocking this deal in any way possible. I expect to see the stock tank, and deservedly so. If I were a shareholder, I would be calling for Yang’s head. This deal was by far the best opportunity the company had to achieve some value.”

And over at Valleywag, Owen Thomas says Microsoft CEO Steve Ballmer’s days may be numbered as well:

Emails are flying out of Redmond with this speculation: Microsoft CEO Steve Ballmer’s botched $50 billion bid for Yahoo could mean the end of his career. While Microsoft’s board reportedly gave the CEO considerable leeway in handling the deal, his dithering approach and his failure to sell the deal both to Yahoo’s board and Microsoft’s own executives don’t reflect well on the sweaty screamer. The only problem: Microsoft has no obvious successor for Ballmer.”

At paidContent, Rafat Ali suggests some other business partners with which Microsoft might ally:

One would have to believe that Facebook will be back in play. Microsoft is already the advertising provider for the social-networking service, and also owns a small part in it. This would give it a strong toehold in the social-media space and help it experiment more with new advertising models, among other things.
Then, to block and isolate Yahoo further, AOL’s buyout would be a possibility. Time Warner (TWX) is certainly interested in spinning it out, and is still speaking to Yahoo on a combination. Google (GOOG) is a 5% shareholder of AOL, so things might have to work around that.
Certainly, if Diller really wants to get rid of IAC’s (IACI) disparate companies in this spinoff, then Microsoft could be a ready buyer.
The other smaller possibility includes CNET (CNET), though it’s hard to see synergies between the two companies.
Further down the money chain would be tons of other companies like Twitter, Digg, Meebo and any other $50 million to $500 million company.”

CNET’s Stephan Shankland wonders if an ad deal with Google is really a viable option for Yahoo:

But relying on Google for ads, even in a limited way, is in effect admitting defeat in a key part of Yahoo’s business. Even if it gets more money from the higher revenue per click generated by Google’s ad technology, relying on its biggest adversary raises the possibility that a central part of the company’s business could be hollowed out.”

BoomTown’s Kara Swisher agrees:

While Yahoo might not have wanted to be acquired by Microsoft, its alternative to goose its revenues by relying on Google in an outsourced online search-ad deal is one it might regret even more if struck.”

At CenterNetworks, Alan Stern suggests Yahoo shack up with AOL:

I’ve said for years now (many years before CN) that Yahoo and AOL needed to merge. It would have been a mega-merger years ago but would still be huge even today. I touched on it a year ago on CN. Both AOL and Yahoo are consumer-facing Internet companies. Microsoft is not and to try to just plug Yahoo would be very difficult. While there is a good bit of overlap with AOL and Yahoo, the ability to maximize the mainstream is the key. AOL is looking to launch a large number of content sites this year, they have Platform-A for advertising and the number one IM client out there. Don’t forget Bebo as well. Yahoo brings some semi-powerful social apps and a huge content network along with some leading Web apps.”

While Silicon Alley Insider’s Henry Blodget feels Yahoo should move ahead with its Google outsourcing deal:

It allows Yahoo to focus on businesses it can win, instead of throwing money at a war it has already lost.”

And, finally, DealBook wonders if Microsoft is going to walk away from the biggest deal of its 33-year history.

It certainly appears that way at the moment. Which means there’s really only one thing for certain come Monday: Yahoo’s shares will sink deep into the mud, and Yang and Co. will be hard pressed to placate investors. Seems that in the end, the only so-called “sacred cow” Yahoo CEO Jerry Yang will slaughter is his company’s share price …”